Menu Costs and the Neutrality of Money

Andrew Caplin and Daniel Spulber

No 2311, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: A model of endogenous price adjustment under money growth is presented. Firms follow (s, S) pricing policies and price revisions are imperfectly synchronized. In the aggregate, price stickiness disappears and money is neutral. The connection between firm price adjustment and relative price variability in the presence of monetary growth is also investigated. The results contrast with those obtained in models with exogenous fixed timing of price adjustment.

Date: 1987-07
Note: EFG
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Citations: View citations in EconPapers (435)

Published as Quarterly Journal of Economics, Vol. 102, no. 4 (1987): 703-726.

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Journal Article: Menu Costs and the Neutrality of Money (1987)
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